R.I. Gov. Chafee expresses confidence in state’s 38 Studios lawsuit

Kate Bramson Journal Staff Writer journalkate

Monday

Mar 31, 2014 at 7:55 PM

PROVIDENCE, R.I. – Governor Chafee emerged from a closed meeting with the Rhode Island Commerce Corporation Monday night saying he has “a lot of confidence in where this case is going,” referring to the state’s lawsuit against the people and firms in

PROVIDENCE, R.I. – Governor Chafee emerged from a closed meeting with the Rhode Island Commerce Corporation Monday night saying he has “a lot of confidence in where this case is going,” referring to the state’s lawsuit against the people and firms involved in the failed 38 Studios loan deal.

But he stopped short of characterizing that confidence when asked if he thought the state would recoup some money for the taxpayers.

“Ah, take it step by step,” he said.

Meanwhile, state Sen. James C. Sheehan on Monday reiterated his request, with a news release, that all court documents from the case be made public.

“While it is important that the state recover money lost as a result of the failure and bankruptcy of 38 Studios, I believe it to be equally important, if not more so, that the public receive a full accounting of what transpired to bring about this turn of events,” wrote state Sen. James Sheehan, D- Narragansett, chairman of the Senate Committee on Government Oversight. “Therefore, I request that you, Governor, and the Board of Directors make certain that any settlement proposal will not include the sealing of depositions or exhibits from the public view. The public has a right to know all the facts in this case. Any attempt to shield the truth for a slightly higher settlement offer, for instance, would be contrary to the public interest.”

The Commerce Corporation’s predecessor, the former Rhode Island Economic Development Corporation, issued $75 million in bonds in 2010 to raise cash for former Red Sox pitcher Curt Schilling’s 38 Studios. But the video-game company’s bankruptcy in 2012 left Rhode Islanders to pay back about $100 million in principal and interest payments due on those bonds.

The state filed a sweeping lawsuit in November 2012, seeking to recoup its losses from 14 defendants, both firms and individuals, including Schilling and former EDC Director Keith Stokes, who played key roles in crafting that loan deal.

Yet Rhode Island has also begun discussions about potentially settling with one or more of the defendants. Chafee acknowledged on Monday that speaking about the commerce board’s closed-door discussions — another one took place last month — could jeopardize a settlement.

“The main goal is to maximize the returns for the taxpayers,” Chafee said. “And, obviously, we want to be as forthcoming as possible, but sometimes the best strategy is to take things methodically, step by step, and disclose what you can at the appropriate time. … Time is a necessary ingredient of anything worthwhile. This is just another case of: You want instant gratification, but the best result in this case — sometimes time is a better step to maximizing the return.”

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